An analyst who is evaluating a firm's working capitalmanagement would most likely firm's : be...

An analyst who is evaluating a firm's working capital management would most likely firm's : be concerned if the average collections period is lower than that of its peers . total asset turnover is lower than that of its peers cash cycle is longer than that of its peers . payables period is longer than that of its peers .

Expert Solution

Working capital management studies mainly focus on the short-term cash obligation for the firm.

If the firm is getting back its cash late, then it is a problem .

If the average collection period is lower, the firm is taking payment early from the customers.

If the payable period is longer, that means the firm is giving money late to its suppliers.

If the cash cycle is longer, the firm is taking more time to convert to cash which is a concerning sign.

Hence here " cash cycle is longer than that of its peers " is the correct answer.

jeff jeffy answered 2 years ago

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